AGO Opinion 83080

April 15, 1983
Senator Clarence E. Jacobsen
Nebraska State Legislature
Room 2105, State Capitol
Lincoln, NE 68509

Dear Senator Jacobson:

This is in reply to your inquiry as to the constitutionality of L5 503, Eighty-Eighth Legislature, First Session.

This bill, among other things, authorizes the State of Nebraska to appropriate funds and make grants therefrom to private railroad companies for improvement of their roads. A companion bill, LB 503A, appropriates money for this purpose.

Article Xlll, section 3, of the ~Nebraska Constitution provides in part: "The credit of the state shall never be given or loaned in aid of any individual, association, cr corporation." Chase v. County of Douglas, 195 Neb. 838, 24i.2d 334 (1976).

The Supreme Court of Nebraska held a portion of a Nebraska statute unconstitutional which authorized governmental subdivisions to expend tax money to acquire real estate for the purpose of promoting industrial development. In speaking of the industrial development amendment to the Nebraska Constitution, which is Article XIII, section 3, the court stated: "Article XIII, section 3, remains in the Constitution and under its terms any loan of credit made by the state, by a county, or by a municipality to a private individual, association, or corporation is unconstitutional. State ex rel. Beck v. City of York, supra."

Since the above case, of Chase v. Douqlas, sutra, the Supreme Court of Nebraska hold t Mortgage Finance Fund that those who did not violate, this section of the Constitution on the ground that none or the funds preveil in that case were state funds and the state was specifically exempt in the bonds from any obligation.

LB 503, however, clearly authorizes the use of state tax funds.

From the foregoing, it is our opinion that LB 503, if passed, would be in violation of Article VIIi, section 3, of the Nebraska Constitution.

Very truly yours,

Attorney General